Pennsylvania will lease 74,000 forest acres for gas drilling

One of Appalachia's largest landowners, Pennsylvania's state forestry agency, wants in on any windfall from drilling a potentially lucrative natural gas formation.

More than 74,000 acres, or more than 115 square miles, in three north-central Pennsylvania state forests went up for bid today to natural gas companies that are in hot pursuit of the mostly untapped Marcellus Shale natural gas formation.

The Pennsylvania Department of Conservation and Natural Resources posted legal notices on Monday announcing the lease sale. The department had said earlier this year that it would allow new drilling to resume following a five-year moratorium, a decision that pleased exploration companies and angered environmental groups.

Propelled by high natural gas prices, companies from Texas to Canada are scouring for drilling opportunities on private land that sits atop the Marcellus Shale formation, a deep gas reservoir located some 6,000 to 8,000 feet underground.

In some cases, company "landmen" have drawn accusations of using aggressive tactics to get property owners to sign lowball leases.

The formation is thought to contain large quantities of natural gas, with the best prospects in upstate New York, eastern Ohio and across much of Pennsylvania and West Virginia. For decades, geologists and exploration companies have known about the gas trapped in the Marcellus Shale, but only recently developed a way to extract it.

More than 300 companies have expressed interest to the department in drilling on Pennsylvania's state forests, although state officials refused to release the list. The department owns about 2.1 million acres of state forest.

Bids for the below-ground oil and gas rights on 18 tracts will be accepted until 2 p.m. on Sept. 3. To win, a bidder must submit the highest offer on the first year's land rental.

The 10-year lease also includes standard annual rental fees -- $20 an acre in years two through four and $35 an acre in years five through 10 -- and a standard 16 percent royalty collected by the state on natural gas production.

For each tract, state forestry officials will limit the number of well pads that are allowed, encourage the use of existing roads and prohibit surface work that could damage sensitive areas, waterways or recreational areas.

The tracts are in the Loyalsock, Tiadaghton and Tioga state forests in Tioga and Lycoming counties.

Pennsylvania state officials imposed a moratorium on drilling in state forests in 2003 in response to concerns that roads, well pads and pipelines were destroying wildlife habitat.

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